Chuy's Holdings Inc (CHUY) 2014 Q4 法說會逐字稿

Good day, everyone, and welcome to the Chuys Holdings Incorporated fourth-quarter 2014 earnings conference call. Today's conference is being recorded.

(Operator Instructions)

On today's call, we have Steve Hislop, President and Chief Executive Officer, and Jon Howie, Vice President and Chief Financial Officer of Chuys Holdings Incorporated.

At this time, I'll turn the conference over to Mr. Howie. Please go ahead, sir.

Thank you, Operator, and good afternoon. By now everyone should have access to our fourth-quarter 2014 earnings release. It can also be found on our website at www.chuys.com in the investors section.

Before we begin our review of formal remarks, I need to remind everyone that part of our discussions today will include forward-looking statements. These forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are also subject to numerous risk and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition.

Also during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. And the reconciliation to comparable GAAP measures is available in our earnings release.

With that out of the way, I'd like to turn the call over to Steve.

Thank you, Jon, and thank you everyone for joining us on the call today. As most of you know, in January we announced selected preliminary results for our fourth quarter, including comparable sales store sales growth of 3.8%, an increase in total revenue of over 20%. And a full-year earnings per share of $0.67 to $0 69, which implies $0.12 to $0.14 for the quarter.

As it relates to our earnings, I'm pleased to say that we came out at the high end of our expected range. Additionally, the growth in our same-store sales marked our 18th consecutive quarter of positive same-store sales growth as our fresh, authentic, made-from-scratch Mexican food, upbeat atmosphere and great value continue to resonate with our guests.

As we enter 2015, one of our key areas of focus are on initiatives that drive sales and improve margins, especially as they relate to our non comp units. As most of you know, the class of 2013 skewed heavily towards new markets which -- where we lacked the same level of brand awareness that we have in our existing markets. As a result, sales at the number of these restaurants settled in below our internal targets.

Initiatives such as enhanced local store marketing and branding designed to highlight our key strengths and points of differentiation have been put in place to drive sales growth and are beginning to gain traction. As we fill out these markets in 2015 and beyond, and brand awareness continues to improve, we believe we'll see a corresponding improvement in AUV.

Additionally to improve labor efficiencies at these restaurants, we've implemented labor best practices for scheduling as well as management rationalizations based on volumes, which we are implementing in the first half of this year.

Swishing to development, during the fourth quarter we opened our 11th and final restaurant of the year and Springfield, Virginia outside of Washington DC, which brought us up to a total of 59 restaurants in 14 states at the end of FY14. We have opened two new restaurants to date in 2015; one is Southlake, Texas and one additional restaurant in Orlando, Florida. As we previously noted, we have slightly revised our development target for 2015 and expect to open 10 to 11 new Chuys restaurants during the year.

We also -- we are also taking a different strategic approach to our restaurant development. Beginning in 2015 we will focus on getting to larger, denser markets more quickly as we grow our restaurant base. While we have in recent years grown our restaurants in a somewhat sequential manner from our existing hubs, we believe our entire restaurant base will benefit from greater brand awareness by ramping up development in new larger markets more quickly before backfilling into medium and smaller markets. This is similar to the approach we have taken in Washington DC area during 2014 and we are pleased with the results to date.

In the coming years, we will also look to larger markets like Chicago and Miami, similar to the DC area in population density, with a healthy competitive set leading to larger customer base with a good propensity to eat Mexican food. In addition, we have added a new Director of Real Estate to our team and added a second Master Broker to our system. We believe these changes will help enhance the quality of our new restaurant sites. While 2015 development will be modest below our long-term target, we remain excited about the tremendous white space opportunity ahead for us to grow the Chuys brand going forward.

Now I'd like to turn the call over to our CFO, Jon Howie, for a more detailed review of our fourth-quarter results.

Thanks, Steve.

Revenues increased by 21.7% year over year to $61.8 million for the fourth quarter ended December 28, 2014. The increase included $10.5 million in incremental revenues from an additional 148 operating weeks produced by 13 new restaurants opened during and subsequent to the fourth quarter of last year. We had a total of 763 operating weeks during the fourth quarter.

As Steve mentioned, comparable restaurant sales grew 3.8% year over year for the fourth quarter. Comparable restaurant sales growth was driven by a 1% increase in traffic and a 2.8% increase in average check. There were 41 restaurants in the comparable base during the fourth quarter of 2014 including 2 new restaurant added to the base at the beginning of the quarter. We consider restaurants to be comparable in the first full quarter following 18 months of operation.

As a reminder, our restaurants can open at volumes greater than their normalized run rate. In the case of our strongest openings, the honeymoon period may last longer than 18 months -- than the 18 months we allow before a restaurant drops into the comp base.

Given the small number of restaurants currently in our comparable base, the timing and strength of our new unit openings may create a short-term headwind in our comparable restaurant sales growth in some quarters. To date that headwind has typically reduced our comparable restaurant sales growth rate by 50 to 120 basis points in any given quarter.

Switching over to expenses, our cost of sales as a percentage of revenue increased approximately 120 basis points year over year to 28.4%. Overall food cost inflation was 7.6% for the quarter, driven by increases in dairy, beef and chicken.

Labor cost as a percentage of restaurant revenue increased 50 basis points year over year to 34.6%, primarily due to the increased training and staffing levels coupled with labor inefficiencies at some of our non comparable restaurant location, which still account for 31% of our overall restaurant base. Labor in our comparable restaurants as a percentage of revenue improved 110 basis points year over year.

As Steve noted, we are currently in the process of implementing best practices for labor scheduling, as well as management rationalizations based on volumes. While we are pleased with the results we have seen to date, we would expect to see more tangible improvement in labor margins during the second half of 2015.

Restaurant operating costs as a percentage of revenue decreased approximately 60 basis points year over year to 14.2%. The improvement was driven primarily by lower liquor taxes as a result of the new liquor tax law in Texas which went into effect on January 1, 2014, offset by increases in utilities and insurance.

As a reminder, a couple of items to note for 2015; our first quarter of 2014 included approximately $77,000 of one-time adjustment for rebates related to our new beverage contract. Secondly, our employee benefit expenses are included in our restaurant operating line. And we expect the impact from the implementation of the Affordable Care Act to result in an incremental increase in this line item of approximately $500,000 for 2015.

Occupancy cost as a percentage of revenue increased approximately 50 basis points year over year to 6.5%. Last year's occupancy included adjustments to estimated property and real estate taxes on newer locations which had a favorable impact on occupancy expense of approximately 40 basis points last year.

Additionally, we still are experiencing increased rent and property taxes as a percentage of sales at newer locations and some deleveraging on lower volumes as certain non comparable restaurants. As a result we expect our occupancy as a percentage of sales of 6.5% to 6.6% in 2015.

General and administrative expenses increased $3 million -- increased to $3 million in the fourth quarter from $2.3 million in the fourth quarter last year. As a percentage of revenue, G&A increased approximately 30 basis points year over year to 4.8%. The increase in margin was largely driven by an increase in stock-based compensation related to our new long-term incentive program partially offset by lower performance-based bonuses.

Depreciation and amortization expenses increased $500,000 to $2.9 million from $2.4 million in the fourth quarter of 2013. The increase was driven by increases in equipment and lease hold improvement costs associated with new restaurants.

Our effective tax rate was approximately 21.5% compared to 24.9% during the fourth quarter of 2013. The lower rate this year is primarily attributable to higher percentage of employee tax -- employment tax credit, the pretax income this year versus last year. Net income in the fourth quarter of 2014 was $2.3 million, or $0.14 per share, as compared to $2.5 million, or $0.15 per share in the fourth quarter of last year.

With respect to our 2015 outlook, we are providing the following annual guidance: our diluted net income per share is expected to range from $0.74 to $0.77. This compares to diluted net income per share of $0.69 in 2014.

Our net income guidance for FY15 is based in part on the following annual assumptions. Our revenue expectations include a comparable store sales increase for the full year of approximately 2.5%. Restaurant pre opening expenses are expected to range between $4.2 million and $4.7 million.

We expect G&A expenses to run between $14.5 million and $15 million. We expect our pro forma effective tax rate for the full year to range between 28% and 30%. And we expect annual weighted average diluted shares outstanding of 16.7 million to 16.8 million.

Lastly our development plans for 2015 call for 10 to 11 new Chuys restaurants, of which 2 have already opened. Our capital expenditures net of tenant improvement allowances are projected to be approximately $27.5 million to $30 million.

And now I'll turn the call back over to Steve to wrap up.

Thanks, Jon.

In closing, we are excited about the short and long-term prospects of our business including the continued growth of our restaurant base with sales volumes and return well ahead of industry norms. Our freshly prepared craveable Mexican-inspired offerings, tremendous value and energetic atmosphere have led to industry leading average unit volumes and a long history of same-store sales growth.

We continue to tackle the near-term challenges. We believe that the sales driving and operational enhancing initiatives put in place along with the continued backfill of these developing markets will drive those results toward Company average. We're using the learnings from all of our recent openings to optimize our new unit model going forward.

Before I turn the call back over to the Operator for questions, I'd first like to take a moment to thank all of our Chuys employees. Our success has always been a testament to their hard work and dedication to earn the dollar every single day. With that, we're happy to answer any and all questions. Thank you.

(Operator Instructions)

Will Slabaugh, Stephens Inc.

Can you go into a little bit more detail about the labor and other caution issues that you put into place in your new restaurants? And then what that might mean in terms of the time to ramp these new units up toward your target profitability?

Hey, Will, this is Steve. Thank you.

Well as far as -- obviously the cost of good initiatives are obviously based on little bit of the commodity pricing that was seem to ease up a little bit on us. You see us, we're probably projecting a 1% to 2% on the commodity increases for the year.

As far as the labor efficiencies, as I mentioned, when we were on the road earlier this year, we have a base productivity standardization, which is basically sales per hour and the needs and how we're going to ramp up the new stores much, much quicker. And as I mentioned in my script, labor scheduling and best practices is basically taking the stores that are really, really doing well and moving those standards into the newer stores and making them move much, much quicker.

And then finally the neighbor managers rationalization based on volumes is depending on how many managers will be in the unit. Again, we're in the middle of really jumping in and putting that into practice right now. We've seen some nice initial reaction to this, and through the whole first half of this year, we'll implement the whole deal. Where we'll start seeing some better results and more tangible results in the second half of the year.

And one quick follow up if I could, it looks like it was a first quarter in maybe five quarters or so where your non comp average weekly sales grew, I think they were around 11% or so. So is that a trend you expect to continue in terms of we're moving off of that 2013 class that was all these new markets and now as you backfill a little bit more and go into bigger markets, would you expect that average weekly sales number for new units to be able to continue to grow here?

I would and thanks for bringing that up. So you're absolutely right. If you remember last year it was about 20% down and then it has just gradually gotten better during the year as far as where you're comparing it to last year. So yes, we're about 10% and we would expect that to keep that trend going forward.

Great, thanks.

David Tarantino, Robert W Baird.

My question is related to the new store performance or new unit performance. And you recently outlined a target for new units with volumes around $3.75 million and restaurant level margin target of 15% to 16.5%. So two parts here, one is, is that where you think the 2014 class is settling into? Are those the right numbers to think about for the class you most recently opened?

And then secondly, could you talk about your confidence level and being able to deliver those numbers for the 2015 and 2016 classes that you're working on now?

I'll start out and then I'll give it to Steve. Yes, we expect the 2014 stores to come in around those numbers, David. Currently we're at AUV rates in excess of about $4.3 million, $4.4 million. We'd expect them to settle down at a normality rate right around $3.8 million. And so we think we can capture those margins that we talked about.

And as far as the confidence, we're fairly confident as we move forward, David, especially with the adjustments we've made in real estate structure and strategy that we feel real, real comfortable moving forward with the guidance that was given as a blended rate of openings.

Got it. And then a clarification on that margin structure, Jon, is that assuming that you get some of the cost savings that you talked about? Is that -- in other words, are those required to get to that 15% to 16.5%, or would that -- would just the upside versus that number, if you got those cost optimization in?

At those lower levels, those are included, the quicker ramp-up that Steve was talking about earlier, at some of those newer stores.

Yes, but having said that, we have stores that are at that $3.7 million number that are doing those type of margins currently, David.

Got it. Great, that's helpful.

And then Jon, as you think about new units coming in at margins that are lower than the existing base, when do you think you'll start to see equilibrium on the restaurant margin line? Is that something -- do you think you will be able to hold the restaurant margin line in 2016, or is that going to be difficult to do next year?

I think it's going to be difficult to do in 2016, but I think we'll start seeing something in 2017, a little bit.

Great, okay. Thank you very much.

[Amarona Lee], Wells Fargo.

So earlier you mentioned, our you pointed to a 50- to 120-basis points interest sales headwind from new units entering the comp base. Given that the class of 2013 units are entering the comparable base this year, would you expect this to be a tailwind to same-store sales this year?

We don't expect a tailwind. We would expect it to be less than what we've seen in the past. But you still have a selection of stores in there that do have that high opening rate and will have the normal fall off. So we're not expecting a tailwind, but we're not expecting as much headwind as we've seen in the past.

Understood. And guidance real quick, your 2015 EPS guidance at the midpoint roughly implies 10% year-over-year growth. And what would you expect the cadence of this EPS growth rate to look like? Would it be more backend-weighted, or front end-loaded, or evenly split?

I would think it's going to be a little more backend-loaded as we implement some of these initiatives and labor. We'll see some labor favorability in the back half of the year versus the front half.

Got it. And if I may, one last question. I think I might have missed this earlier, but did you mention what your COGS and labor as a percent of sales might look like in 2015?

In 2015?

Yes.

Yes, we haven't gone into that.

Okay, just making sure. Okay, great, thanks very much.

I think Steve did mention -- to go back on cost of sales, I think Steve did mention that we're expecting inflation of 1% to 2%. As I spoke in my comments we're at about 7.6% for the quarter and 5.5% for the year in commodity inflation. So we don't expect that kind of inflation next year.

Understood, thanks very much.

Andy Barish, Jefferies.

Was the 2.8% at check average, was that all price in the fourth quarter?

Yes, I mean for the most part. There's a little mix involved, but for the most part, as you remember, we took 1.5% to 2% in the first part of the year and then we took another 1% there at the end of the year.

In September.

In September, so not all of that flowed through obviously. So some of it's mix and some of it's price.

Right, and so are you running that -- what did you do in February in terms of lapping that price increase? Basically are you expecting 2.8% to continue until September?

I think it'll be -- Andy, as you know we always take our price increase. And again if you remember, September, we were really getting ready for the Obama Care, is why we planned on, why we did it in that one.

In February we take our price increase. And we took approximately between that 2% and 2.5% price increase for the Company in 2015. So we're looking at anywhere from 2.5% to 3%.

Okay. And any significant comp improvement here, the comps have been terrific, but anything in the first quarter like we've seen with some other casual dining companies, or are you expecting the 2.5% guidance fairly equally through the year?

Right now I'd say it's pretty even for the beginning of the year. We did start strong, Andy, the first seven weeks of the year. Which is a little bit above the numbers that we've said here.

But we lost quite a bit of runway at the last two weeks where a lot of our stores were closed in week seven and in week eight. This last week, we had a lot of stores in our Nashville, Atlanta, Birmingham and even Norman and a little bit of Dallas, that really got affected quite a bit in the last two weeks.

Okay, thank you.

David Carlson, KeyBanc.

A real quick question, G&A guidance, I think, is assuming somewhere between 24% to 28% up this year. What is that, when you look at across-the-board, what is the really margin assumption at the store level to get to the $0.74 to $0.70 EPS guidance?

Well I haven't given that, but I'll talk to you about the G&A guidance. The big thing -- the big driver on that is the performance-based bonus. As you know we took it down quite a bit last year. And so all of that increase over what we've been saying as far as leveraging our G&A by 60%, 70% of our overall revenue growth, that's because we're expecting the target bonus this year. And we reduced it substantially last year to the tune of over $600,000, $700,000.

So a lot of that increase this year is that as well as the continued amortization of our LTI program, which when we get four years into that program, that should flatten out. And then we should get back to some of that leverage that we see on the G&A line.

And we'll get back to that leverage next year.

Okay, thanks. I'll hop back and if I have anything else.

(Operator Instructions)

Andrew Strelzik, BMO Capital Markets.

So you gave some good color around some of the cost savings opportunities that you're implementing. But can you talk more about the sales driving initiatives, and what has you most encouraged and some of the specific changes that you've made?

Sure, and again, we tested a lot of them throughout the year of 2014 and we're starting to implement them basically again through the first half of this year. But a few of the things that we did is as we moved out, we've learned a lot about making sure we talk about our defining differences.

So starting the very first day of this year, we changed all menu covers in the entire Company. Basically it's Austin originals out of Tex-Mex that we're highlighting on the menu and on the back page, all the freshness that we have. And really talked about our defining differences, whether it be our hand rolled tortillas or specifically that you can customize any plate and do it the way you want it. So that's on the cover of every menu.

As far as media and TV demos, again we're really a grass root market, I think, but we're on TV all the time, on cooking shows where we're invited to do some stuff on that. And we've done a quite a bit. We're also on the testimonials on radio personalities, we're on their shows where we're feeding them, and they're actually doing some of their shows from our restaurants.

As far as some of the events and the program events, we have this thing that we do it once a month with local bloggers and journalists and we do a visit day where we walk them through the kitchen. Again really explaining our defining differences and what we do differently.

We have a new residence program where we're involved in the community, not only a new sales of homes but also condos and apartments. Obviously, we've always done our community ties and the partnerships we do in the community as far as how we get involved in the community.

And then obviously a few little ones with pharmaceutical rep happy hours that we do. And then every single store as its own local Facebook page where we talk about all the neat new things that are happening in our restaurants as far as community activity. Those are just to name a few. And we're excited about the movement in all of those.

That's helpful. And then can you also talk about real estate and the availability of real estate as you go to some of these more densely populated cities and how that's change versus the previous strategy?

For sure, the big thing is as I mentioned to you, we're still staying in the geographical footprint that we've always talked about. We're just jumping to the major densely populated ones like the DC market we did in 2014 and I think I mention Chicago is coming in 2016.

And what we'll do is we'll plant our flags in the Chicago areas like we did in the DC area because all in between my stores, the ones that I have in Indiana and then all the way up to Chicago, there's a lot of those things travel back and forth to the bigger markets first. So that's going to actually help our awareness where we're going to go back in and develop in those smaller markets after we exit the bigger ones. So the awareness will be helped out there.

As far as the availability of real estate, one cool thing about Chuys is if you've seen one Chuys, you've seen one Chuys. We're very chameleon like in our approach on how we can build out our stores as long as our kitchen lines fit in perfectly. But we like going into bottom of office buildings. We like going into bottom of residential buildings. We like taking older restaurants and what we call hermit crab and remodel those.

And then we obviously have a couple different prototypes that we do ranging from 6500 to 7500 square feet. So again we see the availability out in all the markets we're going to go to, it is attractive for us. And we're looking good right now, we're well set on 2015 and we're really working maybe on a couple more at the end of 2016 and 2017 right now. So we are looking very, very good there.

As far as the price of them, yes as you move north a little bit, the pricing is a little bit more -- the rents maybe a little bit more high -- higher. But again within our tiered menu systems, we have the ability to maintain our controllable income because of the tiered menus.

Okay and if I can squeeze one more, you talked about restaurant level margin pressures into 2017, but I'm wondering what that looks like from an operating profit margin perspective? You talked about G&A leverage maybe in 2016, so wondering if you're expecting to see that turn a little bit quicker than the restaurant level margins?

The restaurant level margins may turn a little bit this year just because of cost of sales. We're expecting, obviously, decreases in cost of sales from where we're in last year. So that's going to help the margin out.

As far as labor, until we can get all of these initiatives implemented, we want -- don't want to go into too much detail on that. But we do think our labor is probably going to be higher in the first half of the year compared to last year and that'll be flat to slightly positive in the back half of the year. So we're looking at flat to slightly positive on the labor line this year.

Okay, great. Thanks a lot.

Nick Setyan, Wedbush Securities.

Did I understand that correctly, that pricing you expect to be about 2.5% to 3% for 2015, menu pricing?

That includes the September 1 for approximately 1% price increase and approximately 2% to 2.5% that we just took in February. So right around that 3% number is right.

For full year 2015?

Yes. Well it's going to drop off -- the 1% that we took in September will drop off coming to September and then we'll be back to the 2% to 2.5%.

So on average it'll probably be somewhere in that 2.5% range?

Probably.

Yes.

Okay, so can you take me through the puts and takes on why that implied transaction on growth guidance is flat at that point?

As far as come back again?

Well your full-year guidance for comp is 2.5%. I know your pricing 2.5% for 2015. So can you maybe just --

Sure, and what that is, is what I think Jon mentioned in his script. Is as we're still having a head wind of those stores rolling in on our comp base from the longer than 18-month honeymoon. And we've always said it's about 0.5% to 1.2%. We do so, I think last year was 6.6% to 0.8%, we still feel a little bit of a headwind going into 2015.

We also got hit here in the first quarter, as Steve was talking about. So we've -- in two weeks we got hit pretty hard.

Got it, okay. And then would it be possible for you to tell maybe us what the non-comp unit of a margin is at this point in Q4?

You know what, I don't have that broken out with me right now, Nick. But it would be -- the non-comp would probably be in the mid to high single digits.

Okay. Thanks.

Robert Derrington, Wunderlich Securities.

A couple questions, if I may, Steve, there's been a lot of buzz around the concern of the slower Texas economy, and you obviously have a lot of restaurants down there. Can you give us your view of are you seeing or feeling any impact down in Texas from any energy-related issues with the economy there?

Robert, again, this was back like in 2008 when we started our growth and there was a big recession at that particular time, and that's when we actually started our growth and started doing well. Again, obviously over in Houston there's been layoffs, but I don't know if those are really my customers, Rob. So at the end of the day we haven't seen anything until the last two weeks where we had all of the weather. So I'll take away the weather, we haven't seen any material slowdown in our Business or our visits.

Got you, thank you. As far as development, Steve, goes, in some of the Midwest markets, I know many of those are union markets. And I'm curious, as you look into some of those territories like Chicago or maybe into DC, St. Louis, Indianapolis, et cetera, do you anticipate that the cost of development of new stores will be going up and will it be offset by any kind of incremental AUV that you anticipate? Or how are you thinking about that?

It's too early to say if it's incremental AUV. But I will to you in most of the markets that we're going in planning this year, we don't really run into that a whole bunch, definitely not in DC. But as you get into Chicago, actually there's some -- it's not all that bad there. It's actually more in the Columbus' and more in Cincinnati, Ohio a little bit and a little bit in Illinois, but not up in the Chicago area. Right now again how we plan on doing that is really specifically our tiered menus.

Got you. And then lastly, Jon, did you give us any pre opening for -- guidance for preop for this year?

For pre opening?

Yes, any kind of --

It was right around 4.2% to 4.7%.

Okay, terrific, Thank you.

(Operator Instructions)

David Carlson, KeyBanc.

A quick follow up just to confirm, did you say you expect to hold the line in terms of labor as a percentage of sales in 2015?

We can -- it'll be, again, first half of the year, we're going to be probably higher than the last -- or the first half of last year and then we'll be better in the back half. So we'll be flat to, hopefully, positive in labor this year.

As a percentage of sales, okay. And then can you real quickly help us out on some of the timing throughout the quarters of the 10 to 11 openings?

Sure, they're fairly evenly opened. So we're going -- by the end of the first quarter, we'll have three opened. We'll have three opened in quarter two. And then we'll have three opened in -- two to three in quarter three and then the last ones in the fourth quarter.

Thank you.

Brian Vaccaro, Raymond James.

Just wanted to ask about the -- in 2015, your openings, can you remind us the mix of new and existing markets, Steve?

Yes, at the end of the day, it's what our plan was in 2014 is to make sure 80% of the stores that we opened are in our existing markets. And you'll see that again this year.

Probably the new market would be getting up in the Columbus, Ohio, which is actually north of Cincinnati market. But everything else will be in our backflow and backline in all of our stores.

Okay, thank you.

And one other one, as you think about entering some of these larger metro markets, more dense retail areas, et cetera, will you also be elevating the quality of the sites as well, maybe waiting for a second, third, fourth location in that market maybe to be hermit crab, as you sometimes call it and really go for more main on main real estate in the beginning? And how are you thinking about the cost if that is the case?

Thank you.

And the answer is, yes. Yes, obviously, what we're learning I think I mentioned this at the ICR and so forth, we've learned as we move out that yes if we've got to be main and main, but it doesn't necessarily need to be a new prototype.

It needs to be on and on, main and main and to be able to do that, you have to be have good ingress and egress. You have to have great signage. You have to have plenty of parking on site, not garage parking, and so forth. So we're learning all of that.

But yes we'll be going into -- our billboard site would be our first one as we enter the market and then we'll continue to go out. And what we'll want to do when we also go into these major markets, is go in there rather quick to have a real good plan that you end up doing two, possibly three, first year and then be able to follow that up with two to three the following year and two to three following year after that.

So really knowing the market very, very well but getting into the awareness. As far as the cost doing that is exactly what I said earlier, whether it be unions or not unions, it's a tiered menu that would help us as we move in those markets to have a controllable income being consistent.

Okay, that's helpful. Thankful.

That does conclude our question-and-answer session. At this time I'll turn it back over to Management for final closing remarks.

Well, thank you. Well, everybody, thank you so much. Jon and I appreciate your continued interest in Chuys. We always will be available to answer any and all questions. Again, thank you and have a good evening.

And everyone, that does conclude our conference call for today. We do thank you all for your participation.